Vertical Farming Market Size, Share & COVID-19 Impact Analysis, By Type (Hydroponics, Aeroponics and Aquaponics), By Structure (Building-Based Vertical Farm and Shipping-Container Vertical Farm), By Component (Lighting System, Irrigation & Fertigation System, Climate Control, Sensors, and Others), and Regional Forecast, 2022-2029

The global vertical farming market was valued at USD 3.47 billion in 2021 and is projected to grow from USD 4.16 billion in 2022 to USD 20.91 billion by 2029, exhibiting a CAGR of 25.9% during the forecast period. Based on our analysis, the global market had exhibited a decline of -6.3% in 2020 compared to 2019. The global COVID-19 pandemic has been unprecedented and staggering, with experiencing lower-than-anticipated across all regions compared to pre-pandemic levels.

In the market study, we have considered vertical farming applications, techniques and components offered by market players such as Aerofarms aeroponics vertical farms, BrightFarms’s Hydroponic indoor farming, Freight Farms, Inc’s Greener’S shipping container farm. Similarly, Plenty Unlimited Inc. vertical farms and Urban Crop Solutions provide end-to-end hydroponic farming solutions and services such as plat factories, LED lighting and support services.

The vertical farming market forecast can be attributed to several factors, such as growing inclination towards climate control technology requirement of less water and energy for irrigation. This type of farming technique reduces the challenge of arable land. All the above factors are likely to bode the market growth.

Low water usage, enhanced efficiency, food security, and resistance to weather and environmental conservation are expected to increase market growth worldwide. The immense growth of the urban population worldwide elevates the demand for food and vegetables. Hence, the market is experiencing massive investment due to increased demand for advanced agriculture technology.

For instance, in February 2021, McCain Foods Limited invested USD 65 million in GoodLeaf Farms and TruLeaf Sustainable Agriculture, Canada’s vertical agriculture operation. The investment aims to drive innovation in Canada’s agri-food sector. The investment helps GoodLeaf establish a network of farms across Canada.

COVID-19 IMPACT

Disputed Supply Chain Hampered Market Growth during Pandemic

The COVID-19 pandemic has slowed down the world’s economy and impacted various sectors, including the food and agriculture sector. The agriculture sector was impacted drastically owing to supply chain disruption, shortage of food supplies, suspended import and export across nations. Lack of labor and government-imposed lockdown across countries affected the logistics and harvesting plans across the agriculture sector. 

COVID-19 pandemic has highlighted the importance of local food and urban farming, such as vertical and indoor farms. Due to a large population across urban areas, the COVID-19 pandemic disrupted the urban food system, retail and distribution. However, the COVID-19 pandemic accelerated the need for secure and healthy food. Vertical farms to gain traction amid pandemic due to increased demand for organically grown foods. 

For instance, in June 2020, Singapore accelerated the plans to deploy rooftop farms to improve food security and increase farming capacity. Most rooftop farms are widely adopted this farms such as aquaponics and hydroponics to save space. These active initiatives by the countries to expand the market size in coming years. 

Investment in vertical farming increased during the COVID-19 pandemic as vertical agriculture promotes agricultural operations and food production with the increasing population of the world. According to Christina Ra, Plenty's Senior Director, the fresh fruits and vegetables grown worldwide can only feed two-thirds of the population, i.e., 7.5 billion people.

• In August 2020, Leaps by Bayer and Temasek invested USD 30 million in Unfold, a U.S. based vertical farming startup. Through this investment, Unfold entered into an agreement with Bayer for certain rights to genetic material such as a seed and germplasm from Bayer's vegetable portfolio.


• In July 2019, Aerofarms raised USD 100 million in series E funding. Through this funding, the company aims to expand its facilities and develop different types of produce.


• In December 2021 - Dream Harvest Farming Company, a Houston-based vertical farming company, secured USD 50 million in funding from Orion Energy Partners. The company aims to scale up production and construct 100,000 sq. ft indoor vertical farming facility through this funding. Further, the company aims to scale its operations and serve additional retailers.

Thus, COVID-19 pandemic accelerated the venture capital funding across agriculture sector, which is expected to drive the market post pandemic period.

Similarly, according to report published by CB insights in May 2021, global AgTech companies raised around USD 6.2 billion across 640 deals in 2020. In 2021, Quarter 1, the total amount of funding raised in quarter 1 is USD 1,994 million and 149 deals. The COVID-19 pandemic had drastic impact on the amount of investment in second quarter of 2020, where investment dropped by nearly USD 124 million.

Further, the venture capital investment is increased owing to the increased demand for sustainable and innovative agriculture practices to reduce waste, increase yield and eliminate threats of disease and pests. The increased mergers & acquisitions, funding and deals in Agriculture technology is expected to boost this market in coming years.

During the COVID-19 pandemic, the growth of the vertical farming market was hampered for a short period. However, the market is anticipated to exhibit remarkable growth during the forecast period. 

LATEST TRENDS

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Robotics and Artificial Intelligence to Drive Market towards Higher Growth Trajectory

The integration of robotics and artificial intelligence across farms enables tracking the development of plants from irrigation to harvesting. Robots help to move farms vertically from one place to another. Artificial intelligence-powered tools and applications help manage the temperature, light and water required for the plants.

The agricultural industry is turning towards robotics and artificial intelligence technologies to improve crop yields, monitor soil conditions, control pests, organize farm data and improve agriculture-related tasks. Big data analytics, the internet of things, robotics and smart and connected devices provide real-time information to farm producers. The rising technological advancements including analytics and automation enable to effectively manage crop production across the farms. Market players are leveraging these technologies to improve the production, crop health and

For example, Plenty’s farm in San Francisco leverages IoT, robotics, big data, climate control, LED lighting control systems, and AI technology to produce tasty and healthy food. The company implemented AI-powered robots helps to control temperature, watering and lighting.

The temperature and climate change across the facility is constantly analyzed by big data analytics and IoT technology.

For example, Bimantis, an India-based company, established a farming system, The GreenSage, integrated with IoT-powered solutions. The solution helps to monitor and control light, plant growth level, nutrients and air quality automatically.

Thus, the integration of advanced technologies, including robotics, AI, Analytics, and IoT, is anticipated to surge the implementation of these types of farms.

DRIVING FACTORS

Declining Arable Land and Growing Water Crisis to Drive the Market Growth

The growing challenges of land availability for food production as per the growing demand drive the vertical farming market growth across the world. The scarcity of arable land has been exacerbated by increasing urbanization, global population, limited water supplies, and ongoing climate change.

The food and agriculture industries are constantly concerned about the growing food demand owing to the declining stock of land resources for agriculture across the globe. The industries are facing massive challenges in feeding this rapidly increasing global population.

Similarly, the world is quickly shifting towards a water crisis. Future climate changes are likely to worsen water scarcity and affect the food system. In May 2020, as per the World Bank, agriculture accounted for 70% of the freshwater withdrawals worldwide. Similarly, in March 2019, the world Economic forum stated that 90% of the water from rivers, groundwater and lakes is used for farming. Thus, water scarcity increases the food crisis across the globe.

Vertical farms offer solutions to the challenges faced due to water scarcity and limited arable land. Through regulated environmental conditions, vertical farming technology enhances the possibility of water being retained. Through evaporation, less water is wasted in the atmosphere, and farmers are under less pressure to constantly source freshwater supplies.

Thus, all these factors force us to adopt major traditional agriculture alternatives. Vertical farms have emerged as a resourceful alternative for growing high quantity and quality crops. This farms can be used for producing selective food plats while reducing the load from traditional agriculture. Similarly, the system uses controlled transpiration, which is expected to lower water stress.

The vertical farming market analysis also considers the growing water crisis across countries, including Israel, Qatar, India, Jordan, Saudi Arabia, and others likely to increase vertical farms' adoption. The increasing water crisis and declining arable land for traditional practices are anticipated to fuel the demand for this farming technique.

RESTRAINING FACTORS

High Cost of Initial Investment to Challenge Market Potential

Space, light, water, carbon dioxide, and land in conventional farming are all readily available. However, for vertical farms, all of these variables necessitate a high supply cost. Artificial light is used in the indoor farms. The expense of air cooling and heating to maintain the proper temperature and precision monitoring and other relevant software is also included.

Similarly, specific structures must be erected to distribute nutrients and provide a platform for crop growth. As a result, maintenance and resource supply in vertical farms are quite expensive.

SEGMENTATION

By Type Analysis

Rising Demand for Healthy and Safe Food to Fuel Hydroponics Growth

Based on type, the vertical farming market is divided into hydroponics, aeroponics, and aquaponics.

Hydroponics is anticipated to showcase remarkable growth owing to increased demand for healthy and safe food. The growing innovations to improve flavors and sustainability of fruits and vegetables drive hydroponics growth. The reduction of water usage and enhanced yield capacity fuel the demand for this type of farming technique.

Aeroponics leverage air and nutrient-dense mist to grow crops. Aeroponics to gain traction due to higher growth rate control over the nutrient and year-round harvests. Aquaponics systems help in plants growth and, similarly, transform the natural environment to boost aquaculture.

By Structure Analysis

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Shipping Container-based Structures to Gain Traction Attributed to its Transportability

Based on structure, the vertical farming market is bifurcated into shipping container based and building based.

The demand for building based farms structures is growing as new buildings and construction projects across the cities are used to deploy farms. Further, abandoned buildings across cities are widely used to develop vertical farms. For example, Chicago constructed a vertical farm, “The Plant,” in an old pork-packing plant. Similarly, Bowery Farming developed urban farms into existing structures, including unused warehouses using NASA’s Data-based model.

The shipping containers are adopted widely for developing indoor farms. Several companies have refurbished shipping containers into farms integrated with drip irrigation systems, LED lights, vertically stacked shelves to grow various plants. These containers are integrated with a growth management system that allows monitoring and controlling all systems remotely using a computer or smartphone. This is projected to bode well for the segmental growth in the coming years.

By Component Analysis

Climate Control Capabilities of LED Lightening System to Fuel Demand for Lightening System

Based on the component, the vertical farming market is categorized into the lighting system, irrigation and Fertigation system, climate control, sensors, others.

The lighting systems are expected to showcase significant growth in the coming years. The demand for the LED lighting system to reduce operational costs and minimize power consumption is increasing. LED lighting systems generate low heat than conventional light resources, making LED lighting ideal for farms.

The shift in consumer demand for unseasonal food drives the demand for climate control components. Climate control components help to monitor the climate and control lights and humidity. The advanced climate control systems can be managed from mobile or computer, which is expected to drive the growth of the hydroponics components.

The sensors gain traction owing to the increased adoption of advanced technologies such as artificial intelligence, the internet of things and big data analytics. Big data analytics helps to understand and monitor crop health through the data collected from sensors.

Irrigation & fertigation systems enable comprehensive monitoring and provide the same ecosystem to the crops as the external environment and condition, which is expected to fuel the segment growth steadily.

REGIONAL INSIGHTS

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By region, the vertical farming market has been analyzed across five major regions, namely, North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America.

North America holds the largest vertical farming market share owing to the presence of many vertical farms across the U.S. and the adoption of robotics and automation technologies across the farms. The rising demand for organic, fresh, and rich quality food fuels the development of the market across the U.S. and Canada.

Further, the usage of Cannabis is legalized in the states of the U.S. and Canada. The vertical farms are suitable to grow Cannabis, which is expected to fuel the vertical farming market growth. For instance, in January 2019, Thrive Agritech, Inc. provided 1,900 LED grow lights to Choice Laboratories, a marijuana producer in Michigan. The lights help to improve plant quality and minimize operational costs.

Europe is anticipated to showcase significant growth in the coming years. European Countries such as the United Kingdom, Germany, the Netherlands, and Spain are projected to drive the development of vertical farms. The growing investment by agri-tech startups to expand the products and business presence worldwide. For instance, in December 2021, Germany-based vertical farming startup, Infarm, raised USD 200 million to accelerate the products and business expansion. The company leverages cloud technology to manage the cultivation of plants near to consumers to minimize the environmental impact. The rising investment by the market players boosts the market growth across the region.

The Asia Pacific is likely to showcase remarkable growth during the projected period. The rise in the decline of arable land for agriculture in countries including China, India, and some Asian countries is anticipated to boost the demand for this innovative farming system. The water scarcity and increased food demand for the vast population of India, China and Japan are expected to create new market opportunities across the region.

The farmers face a lack of rain, drought, climate change, insufficient irrigation systems, financial challenges, crop failure, increased dependency on chemical fertilizers, and limited crop varieties for years across Asia. This is expected to foster the need for innovative farming techniques in the coming years. For instance, in January 2022, the Union Minister of Road Transport and Highways of India inaugurated India's biggest vertical farm project. The project aims to offer the benefits of soil-based vertical farms to Indian farmers. These factors drive the market towards a growth trajectory.

The Middle East and Africa exhibit remarkable growth during the forecast period due to less arable land availability and rising water scarcity. The growing food and agri-tech initiatives across the United Arab Emirates, South Africa, Saudi Arabia and other countries drive the market growth. For instance, in April 2019, The African Association for Vertical Farming (AAVF) launched a platform for vertical farms network. The association focuses on building a network of organizations, research institutions and individuals of Africa’s agriculture sector. It provides digital platforms to accelerate collective action and coordination across the agriculture sector.

The growing research and development activities by prominent market players boost the development of advanced farming techniques across the region. For instance, in July 2021, Aerofarms started constructing the United Arab Emirates-based subsidiary “AeroFarms AgX LTD” on research and development in Abu Dhabi. The new center focuses on developments in a controlled environment agriculture and indoor vertical agriculture farming. This is driving the adoption of innovative and advanced farming solutions in the region.

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South America is expected to grow at a moderate rate. There is a huge loss of fruits and vegetables produced using traditional farming in Mexico during transportation, storing and processing. The implementation of vertical farms will help address the challenges faced by Mexican farmers. Similarly, these farms to gain traction during the forecast period to reduce the usage of pesticides and chemicals and improve food security across Brazil, Argentina, and other South American countries.

KEY INDUSTRY PLAYERS

Key Players Are Highly Investing in Building New Farms Globally

The prominent players in the market, such as Signify, Freight Farm, AeroFarms, BrightFarms, Heliospectra AB, and Illumitex Inc., are focusing on business expansion through strategic partnership and collaboration with other organizations. These players are investing in globalizing the vertical farming concept by building new farms across countries. The prominent players are also investing in research and development to reduce the additional charges of the system. 

April 2020 – AeroFarms invested USD 42 million to develop a vertical farm across Cane Creek Centre of Danville. The company's investment aims to business expansion across America to provide rich quality food to consumers. 

January 2022 – Plenty Unlimited Inc. secured USD 400 million in a Series E funding round. The funding will support Plenty’s growth, including the proliferation of technology platforms to sell crop farms to partners directly.

List of the Key Companies Profiled:

• AeroFarms (U.S.)


• OSRAM Licht AG (Germany)


• Urban Crop Solutions (Europe)


• Heliospectra AB (Sweden)


• Everlight Electronics Co. Ltd. (Taiwan)


• Signify Holding (The Netherlands)


• Sky Greens (Singapore)


• BrightFarms. (U.S.)


• Plenty Unlimited Inc. (U.S.)


• Freight Farms, Inc. (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• October 2020 – BrightFarms secured USD 100 million to expand its indoor farming. The funding round was led by Cox Enterprises. The company aims to leverage this funding amount to invest in its existing and retail farms. Further, the company aims to expand its presence across the U.S.


• February 2020 – Illumitex Inc. launched an AI platform based on computer vision technology to improve FarmVisionAI. The platform provides augmented artificial intelligence and visualization to monitor and control the farming environment.     

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An Infographic Representation of Vertical Farming Market

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The vertical farming market report highlights leading regions worldwide to offer a better understanding to the user. Furthermore, the market report provides insights into the market outlook with the latest industry growth trends and analyzes technologies deployed at a rapid pace at the global level. It further offers some drivers and restraints, helping the reader gain in-depth knowledge about the market.

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